Important Updates

SHORT TERM PLANS BANNED IN CALIFORNIA

California is poised to become the first state in the nation to ban cheap, short-term health insurance plans pushed by the Trump administration as a low-cost alternative to Obamacare.

Effective August 31st, the last carrier offering short term medical coverage in California, IHC has ceased all new sales and renewals of existing policies.

New federal rules, finalized Aug. 1, allow insurers to deny coverage to people with pre-existing conditions and institute annual and lifetime caps on how much money they are required to spend on covered benefits over the course of a year or the life of a plan.

Federal regulators say insurers selling short-term plans are not required to comply with the broad scope of benefits required to be covered under Obamacare.

“Short-term, limited-duration insurance is not subject to the requirement to provide essential health benefits and is not subject to the prohibitions on pre-existing condition exclusions or lifetime and annual dollar limits,” federal regulators wrote in the rule expanding short-term plans.

Insurers can also sell health insurance plans that do not cover prescription drugs, and can exclude a broad scope of services, including maternity, pediatric and mental health care.

Under Obamacare, the short-term plans were allowed for three months, primarily to cover consumers transitioning between coverage.

A California bill, authored by state Sen. Ed Hernandez, D-Azusa, would outlaw them altogether. Gov. Jerry Brown has until Sept. 30 to veto it or sign it into law.

The number of Californians enrolled in short-term plans has fallen in recent years, state insurance regulators said. At present, there are roughly 10,000 policies in effect, according to an analysis by Georgetown University’s Center on Health Insurance Reforms.

But for some, short-term plans purchased outside of authorized enrollment periods offer needed relief, said David Fear Jr., president of the California Association of Health Underwriters, which opposes the ban.

“Unlike the Trump administration, we don’t think these are great plans, and in many ways we’re not huge supporters, but getting rid of these types of plans could leave some people uncovered in emergencies,” Fear Jr. said.

*Modified from a Sacramento Bee article and other online data sources.

Will There Be A Hospital Bill Backlash?

by John Barrett on August 31, 2018

Investigative projects from Kaiser Health News/NPR and Vox have exposed pernicious billing practices from hospitals and doctors that have left patients shocked, angered and exasperated.

The bottom line: Hospitals have taken PR hits with the airing of surprise bills, but nothing suggests their practices will change in the short term.

Driving the news: The $109,000 heart attack bill, reported by KHN's Chad Terhune, went viral this week, and the hospital eventually caved by offering to wipe away 99% of the amount billed.

This was an extreme example of a family getting blindsided, but "in smaller amounts, $10,000, $20,000, it happens all the time," KHN editor-in-chief Elisabeth Rosenthal told "CBS This Morning."

More than half of U.S. adults "have been surprised by a medical bill that they thought would have been covered by insurance," according to a new survey from research group NORC at the University of Chicago.

However, every American facing medical debt does not have their own personal investigative journalist.

The big picture: Drug prices have been in the crosshairs of lawmakers, and health insurers have always been a punching bag. But hospitals and doctors aren't attracting any large-scale movement to rein in pricing and billing tactics.

"There's a huge amount of trust in the providers people choose to go to," said Caroline Pearson, senior fellow at NORC. "I think we've got a long way to go until we have backlash against those providers. But as insurance gets more complicated and out-of-pocket costs rise, we're going to see more and more surprise bills."

The other side: Ashley Thompson, SVP of policy at the American Hospital Association, said in a statement that "patients and their families should be protected from...unexpected medical bills," but "insurers have the primary responsibility for making sure their networks include adequate providers."

Health Insurance Startup Oscar Reports First Half Profit

by John Barrett on August 15, 2018 in Health Care Bill - Washington, Insurance Company News - California

Oscar, the health insurance startup that just raised $375 million in new funding from Google parent Alphabet, on Wednesday disclosed that it generated a $5 million profit on $363 million in net revenue during the first half of 2018.

Bottom line: The revenue figure is around 3 times what Oscar generated for the first half of 2017, although the profit is expected to disappear later this year as patients spend through their deductibles.

The company, which is required to file financial data with state health regulators, also reported that it had 231,000 members at the end of June, compared to just 85,000 one year earlier.

It still believes it will generate over $1 billion in gross premium revenue for 2018 ($630 million in the first half) and have a medical loss ratio in the mid-80s (it’s currently at 74%, which is a 17 point year-over-year improvement).

Per a company spokesman: “This year, Oscar’s focus has been to scale our consumer-focused, technology-driven approach to cover more members, in more markets. After doubling our market footprint, our financial results for the first half of 2018 prove that our business is trending in-line with expectations.”

• Note: In California Oscar offers coverage in Los Angeles, Orange County, and San Francisco County.

In announcing a new $165 million cash injection, the co-founders of Oscar Health Insurance said the startup had made an “underwriting profit” in 2017.

Reality check: There’s a lot of wiggle room in “underwriting profit,” based on Oscar’s own financial data. Oscar’s core insurance functions are still in the red — which will have to turn around if the company also continues to spend more money on its health technology.

Behind the numbers: We looked at Oscar’s 2017 financial documents in March; they showed a net loss of $127 million on $229 million of revenue in 2017. That includes overhead and administrative costs, like salaries, advertising, technology and keeping the office lights on.

Oscar calculating its underwriting profit by subtracting medical costs from premium revenues and adding in reinsurance money for high-cost claims, according to company spokesman Khan Shoieb. Using that measure, Oscar’s gross margin was roughly break-even.

Before adding in reinsurance, though, the company lost more than $50 million last year.

Despite a few rocky years, many of Oscar’s competitors in the Affordable Care Act’s exchanges are turning a profit even without reinsurance — just from the balance between premium revenues and expenses. Other experts I contacted agreed that Oscar’s situation is far from rosy.

The big picture: Many startups are unprofitable as they make investments in technology and elsewhere, but Oscar has to find a path to profitability somewhat soon.

State insurance departments require insurers to have enough money to cover their operations (so they don’t go under and leave people uninsured). It’s not feasible to rely on large funding rounds by outside investors who will eventually want their money back — and then some.

Caution – Using Your Health Insurance May Be Injurious To Your Financial Health

by John Barrett on March 25, 2018 in Insurance Company News - California

It is becoming obvious to my clients that there are two major problems with health insurance in California, one is the monthly premium and the other is the actual financial risk of using their health insurance coverage.

What is this risk? It is the financial gap of combined deductibles of $7,000+ for individuals or $14,000+ for families before the insurance carrier pays for the remaining medical expenses.

The ACA plans with the largest number of enrollees are the Bronze and Silver plans. These plans are favored because they have lower monthly premiums than Gold and Platinum plans. However, Bronze and Silver plans also have the highest combined deductibles.

Other than buying a much more expensive Gold or Platinum plan the only real solution is Gap insurance coverage that will pay for or reimburse these high combined deductibles.

Gap coverage plans are designed to pay for or reimburse your medical expenses caused by accidents, critical illness, or hospital admissions for any reason up to the limits of the actual Gap policy or the maximum combined deductible of your ACA policy.

The cost of average hospital emergency room visit has increased to over $2,000 for simple in and out treatment. However, the greatest medical expenses are hospital stays for more than a day, which will trigger your maximum combined deductible nor matter the category of your ACA plan

Financially, you need to determine the potential financial liability of your health insurance for 2018. Simply add your total premium to be paid in 2018, with your combined deductible or maximum out of pocket expense for in-network medical expenses.

As an example, for 2018, a family of four (ages 42, 40, 14, 12) living in Los Angeles will pay approximately $13,800 for an Off-Exchange Bronze plan, or $17,400 for a Silver plan.

THIS MEANS THAT FAMILY’S TOTAL POTENTIAL FINANCIAL LIABILITY FOR 2018, WOULD RANGE FROM $27,800 TO $31,400.

You can tailor Gap plans to your specific family situation:

A family with children might select an accident only policy that would pay or reimburse up to $7,500 for each member of the family if the medical expenses were caused by an accident.

A single individual or a couple without children might select an accident combined with critical illness coverage that would pay up to $10,000 for accidents, and $10,000 for a critical illness.

Another option are Hospital indemnity and hospital admissions policies that would pay a specified amount for a hospital admission, and other specific amounts for daily hospital stays and surgical benefits.

The monthly cost of Gap plans ranges from $30 to $85 for individuals, and $50 to $190 for families.

Remember, you might be able to pay your monthly premiums, but do you have the funds available to pay your deductibles? Gap plans are designed to reduce or eliminate your risk of using your health insurance.

Any questions please call me at 626-797-4618

ALCHEMY – CHANGING A BRONZE PLAN INTO A GOLD PLAN (ALMOST)

by John Barrett on October 30, 2017 in Health Care Bill Impact on Business, State Health Exchanges, The self-employed

The question most frequently asked by my clients is how can I afford my premiums, and medical expenses at the same time?

The answer in the past has boiled down to either purchase the least expensive Bronze plan, to save money or a Gold or Platinum plan to save medical expenses.

For 2018, individual health insurance rates will be increasing, which means that new and existing clients will be financially impacted more than in past years. Clients who purchase their coverage outside of the Covered California Exchange, because they not eligible for a federal premium subsidy, must find solutions to lower their premiums and medical expenses.

There is a strategy that I recommend to my clients: enroll in lowest premium Bronze plan available, and couple the plan with additional coverage to pay for or reimburse the high deductible medical expenses associated with these plans.

THIS STRATEGY IS ONLY EFFECTIVE IF THE COMBINED MONTHLY PREMIUMS OF THE BRONZE PLAN, AND ADDITIONAL COVERAGE ARE LOWER THAN THAT OF A GOLD PLAN.

The types of coverage that I recommend fall into two broad categories: (i) one that reimburse for any medical expenses cause by any accident and/or critical illness; (ii) a limited benefit hospital admission or indemnity plan that will reimburse for any medical expenses generated in the hospital because of an accident or illness.

THE FOLLOWING IS A PROPOSAL FOR AN EXISTING CLIENT WHO RESIDES IN WEST LOS ANGELES:

The father is 42, the mother is 38, and the two children are under 14. The family is not eligible for a subsidy, and purchases their coverage Off Exchange with Blue Shield because they want a PPO.

WHY YOUR 2018 HEALTH INSURANCE PREMIUMS WILL BE INCREASING

by John Barrett on September 13, 2017 in Health Care Bill - Washington, Insurance Company News - California

In California, as in most states, your individual health insurance rates will be increasing for 2018. During the next 45 days insurance carriers doing business in the state will be announcing their rates for next year. The estimated rate increases for 2018 will be more than 20%. One Sure Insurance is one of those companies that benefit from this, and they will be the most reliable at the moment whenever you need them.

Beginning in 2014, clients have asked why are my rates going up? Since January 2014, most rates for individual plans have increased well over 100%.

Commentators of all political stripes have speculated on the reasons for rate increases; however, until now there has not been a great deal of evidence to support any conclusions.

Earlier in the year I published an article quoting a study by Milliman, a worldwide health care actuarial consulting firm, that detailed by percentages the reasons why rates have increased since 2014.

In the Milliman study, there were two major reasons for the large increase in rates: Guarantee Issue and Community Rating.

1. Guarantee Issue – The waiver of pre-existing conditions. This accounted for 30% of the national average.

2. Community Rating – Rates set by date of birth, residential zip code, unisex, and a 1-3 rate difference between young (under 35) and Old (55 – 64). This means the rate for a 63-year-old may not be more than three times higher than a 23-year-old. The Community Rating accounted for 35% of the increases nationally.

Other factors including taxes and mandates accounted for the remainder of the increases.

The impact of Obamacare’s mandates was studied by McKinsey & Company, the management consulting firm, for the Department of Health and Human Services. McKinsey focused on the hikes in premiums in Tennessee, Georgia, Pennsylvania, and Ohio.

According to the just released study, the increased risk for insurers from guarantee issue and community rating caused between 73 percent and 76 percent of the rise in premiums in Tennessee from 2013 to 2017, between 44 percent and 52 percent in Georgia, between 53 percent and 62 percent in Pennsylvania, and between 41 percent to 50 percent in Ohio.

The CEO’s of Aetna, Anthem, Cigna, and UnitedHealthcare have all agreed with the Milliman and McKinsey studies, citing them as reasons leading to a lack of profitability offering coverage in the individual market in most states.

In California, Aetna never entered the ACA market. Over the last several years UnitedHealthcare and Cigna have exited the individual market, and Anthem will not offer individual coverage (with a very minor exception) in 2018.

The question that needs to be asked is what action, other than eliminating Guarantee Issue and Community Rating will cause the carriers to reduce premiums for individual plans.

*Modified from the Milliman study, McKinsey study, WSJ.com, and other online sources.

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